Investment Insights — Week of September 7, 2026

Hi, I'm Tim Gereg, Head of Capital Solutions.

Another week, another few ticks higher in rates. The two-year U.S. Treasury was up a couple basis points to 4.38%. The 10-year was up 6 to 4.78%, and the 30-year is still hanging out right at 5.25%. The two-year U.S. Treasury is now a full percentage point higher than it was seven months ago, at the start of the Iran conflict. So the week prior to last, we had the Jackson Hole event, the highly anticipated speech from Kevin Warsh, his first speech there as Fed Chair. This coming week, Thursday and Friday, we have PPI and CPI. But last week was a bit of a lull in terms of the market's excitement, which is a bit odd to say considering it was jobs week.

But as we know, that currently the Fed is primarily focused on the price stability side of their dual mandate. So we fully expected the market to largely look through the jobs data, and that's exactly what happened. Friday's jobs report was quite strong. 162,000 jobs were added in August, nearly three times the consensus of 55,000 and 30% higher than the highest estimate on Bloomberg. The prior month's negative print was also revised to a +21,000. And that all brought the three-month average from 20k to now over 71k. The participation rate ticked up 2/10 from 61.4 to 61.6%, and the unemployment rate held steady at 4.1%. So the takeaway is overall, a strong report. There was some mixed news, but nothing that should impact the Fed's decision next week.

The day prior to the jobs report, on Thursday, we heard from the Fed's Christopher Waller. He said that he would be willing to be patient with rate hikes if CPI and PPI this week showed any signs of cooling. The doves loved it, front-end rates backed off a few basis points, but gave half of that reaction back by the end of the day. 

We had renewed conflict in the Middle East over the weekend, which took WTI and Brent back up to $93 and $98, respectively. The market is currently pricing in a 60% chance of a hike in September, and over an 85% chance of at least one hike by year-end. Let's not forget the midterms, as it would be highly unlikely for a Fed to begin a hiking regime the week before midterm elections. So, if the Fed does not take action in September, there's a high chance that we won't see anything until December. 

The primary data point that the market is looking for now is this week's CPI and PPI prints. Some economists have suggested that if CPI comes in soft, say, 0.2% month on month or lower, the Fed will be comfortable remaining on hold, and it's likely that the market will back some of their expectations for a hike. Anything higher, and we may see an uptick in rates, and not just expecting one in September, but likely another two or three by year-end. Bottom line, there are a lot of really smart people on both sides of the fence here who look at the same data and see the world slightly differently. Not only is that OK, it's healthy. In light of the lack of forward guidance, we expect a premium priced in to the rates market likely for the next four years under Kevin Warsh's leadership. That's it for this week's update. Let us know how we can help.